Despite no minimum wage law but because of very strong unions and bargaining arrangements, Danish workers make more than twice as much money per hour working for US chains there as most of our workers make working for them here. And that’s on top of their generous government programs and universal healthcare. Curiously, the companies still make a profit (a smaller one, but it’s still there) and retain employees better, and those fast food employees don’t need to be on public assistance like half of ours are.
You’ve got to have one or the other (if not both) — a good minimum wage law or a labor union capable of negotiating against an array of vast corporate entities — to stand a chance of achieving a situation like this. Yes it means the corporate profits are slightly reduced and the prices are slightly raised, but the workers aren’t forced to live in poverty with food stamps and little to no healthcare, and instead they can pay for housing and consumer goods and move themselves and the wider economy up in the world.
Either way, we end up paying the bill somehow, whether at the point of sale or in taxation. Shouldn’t the goal, even for conservatives, be for the market to provide workers with a living wage and the dignity that comes with that, so taxes and government spending aren’t even involved?
Links to our past coverage of comparisons between US and European labor market systems are below.
More on comparative prevailing wages:
Germany will soon be imposing a nationwide minimum wage of €8.50 an hour ($10.50 or so), which will spur domestic demand. The latter would be a step in the right direction of moderating its hot-button current account surplus.
In Australia, the minimum wage exceeds U.S. $11 adjusted for purchasing power. Yet, its growth in GDP has exceeded the United States for years and Australia has an unemployment rate of 5.8%, below that of the United States. Labor participation is also higher than in the United States. Clearly, a high minimum wage has not destroyed jobs or crippled growth.
More on strong unions and collective bargaining cooperation:
German carmakers in general — along with most major German corporations — are big fans of cooperating closely with unions. This cooperation increases social-corporate harmony and it encourages win-win negotiations instead of everyone trying to bleed everyone else dry. This tradition of having unions and management work together in formalized joint committees, and (in Germany) even usually having the companies partly owned by the workers themselves to give them an official say in management and a stake in the company’s long-term health, has been a key tool for consensus-building and smoothing potential tensions over. That all helps avoid strikes and the violence that often plagued heavy industry in the U.S., UK, and Germany in the 19th century. After World War II, West Germany made much of the tradition a formal legal requirement; tensions and disunity were to be kept at bay at all costs.
The only time this cooperative approach has really been tried on a wide scale in the United States was under Great Depression emergency legislation from FDR which the Supreme Court eventually struck down. The idea was that it would be a lot better to keep workers working instead of going on strike and it would reduce the chance of a mass revolution by the increasingly desperate working class. FDR felt that having the government force corporations to work together with the unions and increase wages cooperatively, rather than under labor duress, was a fair trade-off.